New dairies bring new opportunities

About the only thing slowing up the expansion of the dairy industry into the New Mexico and Texas High Plains is a shortage of cows.

Dairymen from California, south Texas, Virginia, and as far away as New Zealand and Holland, have moved into the Southern High Plains in the last two years, looking for cheaper land, adequate water supplies and a more temperate climate to increase productivity.

Dairy specialists say the High Plains offers dairymen a handful of incentives.

“One of the big advantages is the reduced rainfall, which means dry lot facilities work better,” says Ellen Jordan, an Extension dairy specialist at the Texas A&M Research and Extension Center in Dallas.

“Also, with less rainfall dairies face reduced environmental costs as lagoons don't have to be as big and potential for runoff contamination is reduced. The third advantage is that fewer people live in the area and folks are still accustomed to an agrarian way of life. They welcome the industry,” Jordan says.

Crop producers in the area will have another outlet for their crops and may improve rotations. “There will be a demand for corn silage as well as for other forages,” Jordan says. “In addition, relationships may be built where manure is transported back to the fields that produced the forage, providing both nutrients and organic material.”

“It is a symbiotic relationship where both parties win,” adds Gary Goodall, Texas A&M associate dairy lecturer in College Station. “This does not happen often. Local farmers can purchase fertilizer from the dairy. The dairy has waste to get rid of and the extra organic matter improves farmers' soil.”

Goodall says new markets help local farmers “cut out the middle man.”

Floyd McAlister, County Extension agent in Roosevelt County, New Mexico, says the market for corn silage has improved somewhat with the increased demand. “However, with the number of farmers willing to produce silage it's still a buyers market. About half of our alfalfa production here is bagged as haylage and most of our irrigated winter wheat is bagged as wheatlage now.”

He says wheatlage yields have been impressive, around 20 tons per acre. “All these crops provide high quality feeds in demand by dairies. Growers aren't making big money from these crops, but, all things considered, they beat corn at $2.00 and wheat at $2.50 or so.”

McAlister says the county has around 40 dairies milking close to 50,000 cows. Curry County has about 18 dairies and probably more than 40,000 milking cows. Several dairies currently are under construction in Roosevelt and Curry Counties with additional sites with permits for dairy construction.

“Dairy Farmers of America has sold half interest in their milk plant at Portales to Fontera Cooperative Group of New Zealand,” McAlister says. “The plant is now under the name DairiConcepts LP. The plant will produce milk protein concentrates (MPCs) and other dairy ingredients targeting growing markets in the U.S. food sector. The expanded plant capacity will reach 5.7 million pounds of milk per day and will be the first commercial production of MPCs in the United States.”

Texas county agents also see advantages for established row crop farmers and anticipate a steady growth of the High Plains dairy industry, if the price of milk cows declines.

“Dairymen are paying from $2500 to $3500 for a heifer,” says Curtis Preston, Bailey County Extension agent. “Calves just off the bottle are bringing $600 to $700,” he says. “The area is not set up yet for dairy cow replacement.”

Preston and counterparts in Lamb and Parmer Counties say dairies coming in need a lot of cows. Most are setting up herds of 2000 to 3000 and one prospective site in nearby Deaf Smith County could top 10,000 head.

Preston says initial estimates on putting in a 2500-cow dairy, including the cost of the animals, was about $3 million. “With higher cow prices, the figure now runs from $3 million to $5 million,” he says.

Kent Lewis says new dairies in Lamb County are moving in from Stephenville, California, the East Coast and Holland. “The High Plains offers dairymen advantages,” he says. “Feed sources are close. We grow good corn silage and have a lot of alfalfa. We still have good water and our soils pose less pollution potential. Cattle do well here.”

“Cows give from 2500 to 3000 pounds more milk per year in this area because of cooler summers,” says Preston. “We have had no trouble with feedlot waste, so we should be able to handle the dairies. Plenty of people want the fertilizer.”

Preston says a dairy must include a lagoon and a plan to dispose of wastewater. “But lagoons in this arid climate rarely fill up.”

All three agree that area farmers will see benefits from increased dairy numbers.

“Our next step will be to educate dairymen on the value of forage sorghum for silage,” Preston says. “If the industry keeps growing, we will not be able to produce enough corn silage. We can make sorghum with much less water and get high quality feed and good yields. Sorghum uses from six inches to 10 inches less water than corn.”

He says dairies offer excellent opportunities for alfalfa producers. “But farmers have to meet the demanding specifications for dairy nutrition,” he says. “Growers can get as much as $130 per ton, but they have to commit to growing it properly.”

“We would like to see dairies use more local alfalfa,” Hill says. “And we'd like to see more silage use.” He says corn acreage in the area has decreased for the past six years and most of what has been grown has gone to silage. “We see increased interest in alfalfa.”

“Some dairies are buying land to produce their own feed,” Lewis says, “but most can't produce enough and will have to buy more. That should help local farmers.”

“Dairy owners are buying from a quarter to a half section of land,” Preston says.

“We might see cooperative agreements between dairymen and farmers,” Hill adds. “Dairy operators may not have the land or the experience to grow feed and farmers don't have the dairy expertise and may grow feed on contract. The bankers like the influx of dairies.”

Some drawbacks exist. “Dairies will compete for farm labor,” Lewis says. Preston adds that larger dairies will hire from 10 to 15 people. “Part of that will be minimum wage but some will be higher paid jobs.”

Lewis says getting into forage production, especially with alfalfa, poses challenges, too. Producing high quality alfalfa comes with a pretty good learning curve. “And equipment could be an issue,” he says. “A baler costs around $50,000 and we do not have a custom harvest network for alfalfa hay.”

As the price of dairy cows moderates, all three agents expect to see the dairy industry continue to expand into the High Plains. “A dairyman from California can sell land for a high price out there and replace it much cheaper in this area,” Preston says.